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Finance director's handbook 2
CIMA Publishing is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP, UK 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA First published as Tolley’s Finance Director’s Handbook 2001 Second edition 2002 Third edition 2003 Fourth edition 2007 Fifth edition 2009 Fifth edition Copyright © 2009 Elsevier Ltd All rights reserved Fourth edition Copyright © 2007 Elsevier Ltd All rights reserved Third edition Copyright © 2003 Reed Elsevier (UK) Ltd All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone (44) (0) 1865 843830; fax (44) (0) 1865 853333; email: permissions@elsevier com Alternatively you can submit your request online by visiting the Elsevier website at http://elsevier.com/locate/permissions, and selecting Obtaining permission to use Elsevier material Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein Whilst every care has been taken to ensure the accuracy of the contents of this work, no responsibility for any loss occasioned to any person acting, or refraining from action, as a result of any statement or examples in it can be accepted by the authors or the publisher Any crown copyright material is reproduced with the permission of the Controller of Her Majesty’s Stationery Office Any European material in this work which has been reproduced from EUR-lex, the official European Communities legislation website, is European Communities copyright British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN–13: 978-0-7506-8701-0 For more information on all CIMA Publishing books Visit our website at http://books.elsevier.com Typeset by Macmillan Publishing Solutions (www.macmillansolutions.com) Printed and bound in Great Britain 09 10 11 12 10 Working together to grow libraries in developing countries www.elsevier.com | www.bookaid.org | www.sabre.org Preface The role of the finance director varies significantly between companies, depending to a large extent on the complexity and size of the business and the number of executives and managers available to share in the responsibilities Whilst some finance directors will concentrate primarily on financial reporting, treasury and taxation issues, others will have a much wider remit and be expected to provide expertise and assistance in a variety of areas The field of financial reporting is becoming increasingly complex, particularly for listed companies, where the emphasis is now firmly on transparency and accountability Accounting standards have become more conceptual in nature, underpinned by a requirement for preparers of accounts to apply the spirit and reasoning behind the detailed requirements For listed companies, the requirement to prepare group accounts in accordance with International Accounting Standards (IASs) has created new challenges, and the Accounting Standards Board’s plans to converge UK accounting practice with international requirements over the coming years, together with the adoption in the UK of International Standards on Auditing (ISAs), means that all companies are likely to feel the increasing impact of international harmonisation Listed companies also have significant additional reporting responsibilities under the Combined Code and, if they are registered with the US Securities and Exchange Commission (SEC), under the Sarbanes-Oxley Act 2002 and related SEC rules The current reporting requirements in respect of internal control have focused attention on the issue of risk management and, whilst the detailed reporting requirements apply only to listed companies, there is nevertheless much in the related guidance that will be relevant to businesses of all sizes The gradual implementation of the Companies Act 2006 between January 2007 and October 2009 also brings further changes, and in the difficult transitional phase particular care is needed in identifying whether the old or the new requirements apply The accounting and audit provisions of the Companies Act 2006 generally apply for accounting periods beginning on or after April 2008, although some of the new requirements in respect of auditors apply to appointments and changes in appointments made on or after April 2008 The general economic downturn in late 2008 and 2009 has created further problems, with liquidity risk, the availability of finance and going concern issues receiving particular attention Up to date guidance on these and related issues from the Financial Reporting Council and Auditing Practices Board is highlighted in the relevant chapters xl Preface These are all areas in which the finance director’s input to discussions and decisions is likely to be significant I therefore make no apology for the fact that the chapters on audit, corporate governance, financial reporting and investor relations are the most substantial sections of this book However, in addition to guidance in these key areas, this handbook is intended to provide an overview of other business issues and activities that may fall within the remit of the finance director The book is intended as an initial source of advice and guidance rather than as a comprehensive manual, and sources of further information are indicated where appropriate This edition is based on legal and other requirements in force as at 31 January 2009 In the fast moving world of today, very little stands still for long and an i ndication of known or expected future developments is therefore given where appropriate No reference work can be comprehensive in this complex and fast changing environment, or take account of the specific circumstances of each particular case, and finance directors should therefore always seek appropriate professional advice I am particularly grateful to Sonia McKay and Andrea Oates who have contributed the chapters on ‘Employment law’ and ‘Health and safety’ respectively, and to the editorial team at Elsevier for their help and support Glynis D Morris Chartered Accountant Abbreviations and References Legislation CA 1985 CA 1989 CA 2006 COSHH ERA 1996 HSWA 1974 RIDDOR 1995 TULRCA 1992 TUPE Bodies ACAS ACCA APB ASB ASC CAC CIMA CIPFA CRE EAGGF EMAS EOC ERDF ESF FIFG FRC FRRP FSA HMRC HSC Companies Act 1985 Companies Act 1989 Companies Act 2006 Control of Substances Hazardous to Health Regulations 1999 Employment Rights Act 1996 Health and Safety at Work etc Act 1974 Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 Trade Union and Labour Relations (Consolidation) Act 1992 Transfer of Undertakings (Protection of Employment) Regulations 1981 Advisory, Conciliation and Arbitration Service Association of Chartered Certified Accountants Auditing Practices Board Accounting Standards Board Accounting Standards Committee Central Arbitration Committee Chartered Institute of Management Accountants Chartered Institute of Public Finance and Accountancy Commission for Racial Equality European Agricultural Guidance and Guarantee Fund Employment Medical Advisory Service Equal Opportunities Commission European Regional Development Fund European Social Fund Financial Instrument for Fisheries Guidance Financial Reporting Council Financial Reporting Review Panel Financial Services Authority HM Revenue and Customs Health and Safety Commission xlii Abbreviations and References HSE IASB ICAEW ICAI ICAS ICC ICSA LEC NACOSS NAPF PIRC POB PRAG PSO TEC UITC Health and Safety Executive International Accounting Standards Board Institute of Chartered Accountants in England and Wales Institute of Chartered Accountants in Ireland Institute of Chartered Accountants of Scotland Incident Contact Centre Institute of Chartered Secretaries and Administrators Local Enterprise Council National Approval Council for Security Systems National Association of Pension Funds Pensions and Investment Research Consultants Limited Professional Oversight Board Pensions Research Accounting Group [Inland Revenue] Pension Schemes Office Training and Enterprise Council Urgent Issues Task Force Publications AcoP FRED FRS FRSSE IAS IFRS ISA OFR SAS SORP SSAP Approved Code of Practice Financial Reporting Exposure Draft Financial Reporting Standard Financial Reporting Standard for Smaller Entities International Accounting Standard International Financial Reporting Standard International Standard on Auditing Operating and Financial Review Statement of Auditing Standards Statement of Recommended Practice Statement of Standard Accounting Practice Miscellaneous abbreviations ACT Advance corporation tax AESOP All-employee share ownership plan AGM Annual general meeting ASP Application Service Provider B2B Business to business B2C Business to consumer B2G Business to government C2G Consumer to government CEO Chief executive officer Abbreviations and References xliii CFC CIC CTSA E & OE EDI EHO EMI ETO ISP JWG MA PAYE Plc PPE S2P SERPS SMP SSP UEL VAN VAT VDU WFTC Controlled foreign company Close investment-holding company Corporation tax self-assessment Errors and omissions excepted Electronic Data Interchange Environmental health officer Enterprise Management Incentive Economic, technical or organizational Internet Service Provider Joint Working Group Maternity Allowance Pay As You Earn Public limited company Personal protective equipment State Second Pension State Earnings Related Pension Scheme Statutory Maternity Pay Statutory Sick Pay Upper Earnings Limit Value Added Network Value added tax Visual display unit Working Families Tax Credit Law report references ICR Industrial Cases Reports IRLB Industrial Relations Law Bulletin IRLR Industrial Relations Law Reports Chapter Audit 1.1 The External Audit Requirement 1.2 Audit Exemption for Dormant Companies 1.8 Audit Exemption for Small Companies 1.18 Appointment of External Auditors 1.39 Changes in External Audit Appointments 1.58 Rights and Duties of External Auditors 1.70 Statutory Reporting by External Auditors 1.99 Other Reporting by External Auditors 1.106 Remuneration of External Auditors and their Associates 1.114 Auditor Liability Limitation Agreements 1.121 Internal Audit 1.145 Audit Committees Appendix Useful Websites on Audit-Related Matters Appendix Specimen Terms of Reference for an Audit Committee 1.1 The External Audit Requirement For accounting periods beginning before October 2007, under section 384(1) of the Companies Act 1985 (CA 1985), every company must appoint an auditor or auditors The only exceptions to this, set out in section 388A of CA 1985, are dormant companies and certain small companies, which are exempt from the obligation to appoint auditors if they are exempt under sections 249AA and 249A, respectively, from the provisions of CA 1985 on the annual audit of accounts For accounting periods beginning on or after October 2007, sections 384 and 388A of CA 1985 continue to apply to public companies but are repealed in respect of private companies and replaced by sections 485 to 488 of the Companies Act 2006 (CA 2006) Under section 485 of CA 2006, a private company must appoint an auditor for each financial year unless the directors reasonably resolve otherwise, on the grounds that audited accounts are unlikely to be required (for instance, where the company is eligible for audit exemption and the directors propose to take advantage of this) Finance Director’s Handbook For accounting periods beginning on or after April 2008, sections 384 and 388A of CA 1985 are repealed in respect of public companies as well and replaced by sections 489 to 491 of CA 2006 Section 489 of CA 2006 provides that a public company must appoint an auditor for each financial year unless the directors reasonably resolve otherwise, on the grounds that audited accounts are unlikely to be required For practical purposes, a public company will need to appoint auditors each year unless it qualifies for audit exemption as a dormant company 1.2 Audit Exemption for Dormant Companies At a Glance n A dormant company is usually exempt from the requirement to appoint auditors and n n n n n have its annual accounts audited The definition of ‘dormant’ for these purposes is set out in company law Certain companies are ineligible for the exemption even if they meet the definition Members of a dormant company can require an audit to be carried out in any financial year by following the procedure laid down in company law The directors must make a formal statement in the accounts in order for the exemption to be available A dormant company that acts as an agent for another party must disclose this fact in its annual accounts A company that is dormant, as defined in company law, is usually entitled to exemption from an annual audit The exemption is automatically available to those companies that meet the conditions set out in the legislation The exemption relates only to the annual audit requirement – a dormant company must still prepare annual accounts in accordance with the accounting provisions of the legislation and deliver a copy to the registrar 1.3 Definition of ‘Dormant’ A company is dormant for any accounting period during which it does not have a ‘significant accounting transaction’ This is defined as any transaction that requires an entry to be made in the accounting records, other than: n the taking up of shares by a subscriber in pursuance of an undertaking given by him/her in the memorandum of association; Audit n a fee payable to the registrar on a change of the company’s name; n a fee payable to the registrar on the re-registration of the company (i.e on a change in status from private to public or vice versa); n a penalty under section 242A of CA 1985 or section 453 of CA 2006, as appropriate, for failure to deliver accounts and n a fee payable to the registrar for registration of the company’s annual return (CA 1985, section 249AA(5) to (7); CA 2006, section 1169(2) and (3)) A company that is dormant ceases to be so as soon as a significant accounting transaction occurs 1.4 Eligibility for Audit Exemption as a Dormant Company For accounting periods ending on or after 31 December 2006, a company is ineli gible for audit exemption if it is: n an authorised insurance company; n a banking company; n an e-money issuer; n an ISD investment firm (or with effect from N ovember 2007, a MiFID investment firm) n a UCITS management company or n a company that carries on insurance market activity (CA 1985, section 249AA(3); CA 2006, section 481) In other cases, a dormant company is eligible for audit exemption for a financial year if it has been dormant since: n its formation or n the end of the previous financial period and is entitled to prepare its individual accounts in accordance with the small companies regime (or would have been so if it had not been a public company or a member of an ineligible group) and is not required to prepare group accounts for that financial year l l (CA 1985, section 249AA(1) and (2); CA 2006, section 480) The directors must also make a formal statement in the accounts that the company is entitled to the exemption (see 1.6 below) Index 999 Fraud Act 2006, 12.2 Fraud Advisory Panel, 12.11–12.12 FRC see Financial Reporting Council Freehold property, 22.1–22.2 FRRP see Financial Reporting Review Panel FRS 17 Retirement Benefits, 3.101 FRSs see Financial Reporting Standards FRSSE see Financial Reporting Standard for Smaller Entities FSA power, 18.20 Fuel scale charge, 23.29 Full listing: advertisements, 18.19 AIM, 18.12, 18.15 conditions, 18.17 FSA powers, 18.20 listing particulars, 18.18 prospectus, 18.18 Gas: fire precautions, 13.29 Gearing ratio, 19.23 Gender: discrimination, 10.22–10.26, 10.29, 13.22 General Disclosure Obligation, 16.22–16.36 AGM presentations, 16.32 analysts, 16.34 breach of confidence, 16.30 communication responsibility, 16.28 Disclosure Rules, 16.22, 16.29 exemption, 16.27 global announcements, 16.35 ICAEW guidance, 16.36 inadvertent selective disclosure, 16.31 inside information, 16.24, 16.26 listing requirements, 18.23 making an announcement, 16.29 matters that must be announced, 16.23 public knowledge, 16.25 rumours, 16.33 General meetings, 1.59, 4.28, 4.30, 4.37–4.38 see also Annual General Meetings Generally Accepted Accounting Principles (GAAP), 3.18 Gifts, 16.43 Global Reporting Initiative (GRI), 16.56 Going concern, 6.84–6.108 accounting principles, 11.66 appropriate presumption, 6.103 assumption significance, 6.88 checklist, App contingent liabilities, 6.95 definition, 6.87 factors to consider, 6.91, 6.98 formal statements, 6.102–6.106 overall assessment/conclusion, 6.101 procedures, 6.90 reporting requirements, 6.62 review, App 6, 6.100 use of basis, 6.104–6.105 Golden hellos/handshakes, 23.4 Goodwill, 15.29–15.41 accounting practice, 15.38–15.40 amortisation, 15.33–15.36 ASB proposals for change, 15.39 Companies Act group accounts, 11.83 deferred, 3.100 disclosure, 15.41 IASs, 15.40 impairment, 15.37, 15.41 intangible assets, 15.29–15.41 nature, 15.30 negative goodwill, 15.38 recognition, 15.31 useful economic life, 15.33–15.36 value when purchased, 15.32 Governance see Corporate governance Government initiatives, 24.23 Grants, 24.24–24.29 GRI see Global Reporting Initiative Grievance procedures, 10.44–10.48 see also Dispute resolution Gross dividend yield, 19.24 Gross percentage dividend, 19.24 Gross profit margin, 19.23 Group accounts, 3.17 see also Accounts banking companies, 3.74–3.78 Companies Act accounts, 11.73–11.87 exemptions, 3.18 IASs, 11.6 insurance companies, 3.77–3.78 small groups, 3.44–3.61 Groups: going concern, 6.107 internal control, 6.71 Growth: acquisitions, 7.2 Half-yearly financial reports, 11.118–11.133 accounting policies, 11.126 auditor’s review, 11.123 comparative figures, 11.129 contents, 11.124 directors’ responsibility statement, 11.132 earnings per share, 11.127 external auditors, 1.105 FRRP review, 11.133 1000 Index Half-yearly financial reports (contd) interim reports, 11.119–11.122 management commentary, 11.131 presentation of financial information, 11.128 statutory disclosure, 11.130 true and fair view, 11.35 Harassment, 10.22, 10.26, 13.6 Hazardous substances, 13.32 Health and safety, 13.1–13.73 see also Working hours; Workplace safety accidents/injuries at work, 13.60–13.64 ACoPs, 13.11, 13.24 arrangements, 13.16 company officers, 13.68 competent staff, 13.19 EHOs, 13.67 employees, 13.1–13.12, 13.69 employers’ duties, 13.2–13.8, 13.10, 13.70 fire precautions, 13.28–13.29 hazardous substances, 13.32 HSE, 13.6, 13.12, 13.41, 13.64, 13.66–13.68 information provision, 13.20 legislation, 13.1, 13.28–13.29, 13.65–13.73 manslaughter, 13.68 manual handling, 13.31 new/expectant mothers, 13.22 noise control, 13.30 owners and occupiers, 13.9 plant, machinery and equipment, 13.33–13.41 preventative/protective measures, 13.15 regulations, 13.26–13.27, 13.28–13.32, 13.34–13.35, 13.42–13.43, 13.61, 13.72 rest, 13.51–13.59 risk management, 13.13–13.24 safety representatives, 13.69, 13.71 serious/imminent danger, 13.17 surveillance procedures, 13.18 temporary workers, 13.21 training, 13.20 websites, App 13 workplace safety, 13.25 young workers, 13.23 Health and Safety at Work etc Act 1974, 13.1 Health and Safety (Consultation with Employees) Regulations 1996, 13.72 Health and Safety Executive (HSE), 13.6, 13.12, 13.41, 13.64, 13.66–13.68 Health and Safety (First-Aid) Regulations 1981, 13.61 Hearing protection, 13.30 Hedge transactions, 27.16 Higgs Report, 6.6 Hire purchase, 24.14 HM Revenue and Customs, 20.6–20.25, 26.5 see also Taxation National Insurance, 20.21–20.25 PAYE system, 20.6–20.20 pensions, 21.23 Holidays, 13.56–13.57 Homeworkers, 10.8 HSE see Health and Safety Executive Hybrid schemes, 21.9 Hyperlink, 9.7 IASB see International Accounting Standards Board IASC see International Accounting Standards Committee ICAEW see Institute of Chartered Accountants in England and Wales ICSA see Institute of Chartered Secretaries and Administrators Identifiable asset, 15.2 Identity theft, 4.26, 12.3 IFAC see International Federation of Accountants IFRSs see International Financial Reporting Standards Impairment, 15.17, 15.37 Implied contract terms, 5.4 Incentive schemes, 2.23, 23.11–23.18 company performance, 23.12 corporate ethics, 16.43 defined bonus schemes, 23.14 directors’ remuneration, 23.38 discretionary bonus schemes, 23.13 financial implications, 23.16 listed companies, 23.18 pension implications, 23.17 Indemnity, 8.13, 14.22–14.23 see also Compensation Independence, 1.27–1.34 annual disclosures, 1.30 audit committees, 1.164 audit partners, rotation of, 1.33 auditors, regulation of, 1.34 board, 6.12, 6.16–6.18 directors’ duties, 8.8 ethical issues, 1.29 external auditors, 1.27–1.34, 1.164 internal audit, 1.132 non-audit services, 1.32 post-Enron developments, 1.31 professional requirements, 1.28 small companies, 1.29 Individual accounts, 1.78, 3.16, 11.29, 11.57– 11.72 Index 1001 Ineligible companies, 3.48, 3.66 Information: audit committees, 1.156 available to the public, 4.23 e-commerce regulations, 9.11 external auditors, 1.60–1.61, 1.65 financial information, 18.34–18.35 fraud, 12.34 health and safety, 13.20 inside information, 16.19–16.36 listing requirements, 18.24, 18.34–18.35 price sensitive, 16.20, 16.23–16.26, 16.30– 16.35 professional development, 6.12, 6.21–6.25 Information Technology (IT), 17.1–17.21 access controls, 17.11 back-up procedures, 17.19–17.20 checklists, App 17, 17.7 disaster recovery planning, 17.18–17.21 disposal of equipment, 17.16 downtime, 17.3 fraud, 12.22 large IT departments, 17.17 mobile devices, 17.14 physical security, 17.10 processing controls, 17.12 records, 17.6 security issues, 17.8–17.17 software, 17.4, 17.15 staff training, 17.5 storing back-up copies, 17.20 strategy, 17.1–17.7 virus protection, 17.13 websites, App 17 written recovery plan, 17.21 Initiatives: strategic planning, 25.13 Injuries at work, 13.60–13.64 Inland Revenue see HM Revenue and Customs Inside information, 16.19–16.36 definition, 16.24 disclosure, 16.21 Disclosure Rules, 16.21–16.22, 16.29 General Disclosure Obligation, 16.22–16.36 identification, 16.26 investor relationships, 16.19–16.36 Listing Rules, 16.21, 16.23 price sensitive information, 16.20, 16.23– 16.26, 16.30–16.36 public knowledge, 16.25 Inspection: accounting records, 3.9 contracts, 6.35 minute books, 4.38 registers charges, 4.21 directors and secretaries, 4.17 members, 4.10 Institute of Chartered Accountants in England and Wales (ICAEW), 1.30, 1.108, 1.179, 3.105, 12.11, 16.36 The Institute of Chartered Accountants of Scotland (ICAS), 1.170 Institute of Chartered Secretaries and Administrators (ICSA), 11.153 Institutional shareholders, 6.50–6.59, 16.8, 16.11–16.12 Institutional Shareholders’ Committee (ISC), 6.54, 16.11–16.12 Insurance, 14.1–14.25 assets, 14.12–14.16 brokers, 14.4 buildings, 14.13 business interruption, 14.17–14.18 company law, 3.77–3.78 compulsory cover, 14.7–14.10 digital risk, 14.19 directors, 8.13 employee benefits, 14.25 employers liability, 14.8 goods in transit, 14.15 guidance, 14.5 key persons, 14.24 money, 14.16 motor insurance, 14.9–14.10 pension schemes, 21.11 plant/equipment, 14.14 product liability, 14.21 professional indemnity, 14.22–14.23 public liability, 14.20 risk management, 14.2 stock, 14.15 types, 14.3 utmost good faith, 14.6 voluntary cover, 14.11–14.25 websites, App 14 Intangible assets, 15.1–15.41 accounting practice, 15.7–15.19, 15.38–15.40 amortisation, 15.12–15.15, 15.33–15.36 ASB, 15.6, 15.18, 15.39 capitalisation, 15.8 control, 15.4 definition, 15.2 disclosure, 15.41 examples, 15.3 goodwill, 15.29–15.41 IASs, 15.19, 15.40 1002 Index Intangible assets (contd) impairment, 15.17, 15.37 initial recognition, 15.9 intellectual property, 15.20–15.28 legal issues, 15.14 OFR, 15.6 residual value, 15.16 revaluation, 15.11 useful economic life, 15.13–15.15, 15.33– 15.36 valuation, 15.10 websites, App 15 Integrity, 6.4 Intellectual property, 15.20–15.28 copyright, 15.25 design rights, 15.25 forms, 15.22 granting use to others, 15.26 intangible assets, 15.20–15.28 patents, 15.23 trade marks, 15.24 types, 15.22–15.25 unauthorised use, 15.26 websites, 15.28 Interest: debts, 2.27 Interest cover, 19.23 Interest rate risk, 27.15 Interests: directors, 4.18, 8.16 in shares, 4.19 Interim payments: debtors, 2.19 Interim reports: audit, 1.105, 11.123, 11.133 earnings per share, 11.127 FRRP review, 11.133 going concern, 6.108 half-yearly financial reports, 11.124, 11.125 listing requirements, 18.35 management system, 11.120 preparation requirement, 11.119 presentation basis, 11.128 purpose, 11.121 statutory disclosure, 11.130 timing/distribution, 11.122 Internal audit, 1.111–1.134, 1.121–1.144 see also Audit annual review, 1.135 audit committees, 1.161 benefits, 1.125 corporate governance, 6.81 establishment, 1.128 external audit, 1.123, 1.141–1.143 fraud, 12.15 head of internal audit, 1.130 independence, 1.132 individual systems, 1.138 monitoring progress, 1.137, 1.144 needs assessment, 1.134 objectivity, 1.132 plans, 1.134, 1.136 reports, 1.139–1.140 role/scope, 1.122–1.124, 1.126, 1.133 special assignments, 1.127 staffing, 1.131 terms of reference, 1.129 Internal control, 6.66–6.83 acknowledgement of responsibility, 6.80 annual statement, 6.79 audit accountability, 6.42 audit committees, 1.159 cash resources, 2.16 checklist, App contents of system, 6.75 creditors, 2.30 definition, 6.74 disclosure requirements, 6.67 expenses, 2.30 factors to consider, 6.73 importance, 6.70 purchases, 2.30 reporting requirements, 6.63 responsibility for system, 6.72 reviews, 6.77–6.78, 6.81 working party, 6.69 International Accounting Standards (IASs) see also Accounting Standards adoption implications, 3.105 current standards, 11.22 financial reporting, 11.4–11.12, 11.22, 11.34–11.35 first-time adoption, 11.12 goodwill, 15.40 group accounts, 11.6 IASB, 11.25 IASC, 11.148, 11.149 intangible assets, 15.19, 15.40 interim reports, 11.133 legal requirements, 11.5 preliminary announcements, 11.136 realised profits/losses, 3.105 role of ASB, 11.9 scope/application, 11.10 true and fair view, 1.72, 11.34–11.35 UK convergence, 11.7–11.8 International Accounting Standards Board (IASB), 11.25 Index 1003 International Accounting Standards Committee (IASC), 11.148, 11.149 International Federation of Accountants (IFAC), 11.150 International Financial Reporting Standards (IFRSs), 1.77, 3.18 International Standards Organisation (ISO), 9.18 Internet, 11.147–11.153 audit considerations, 11.152 financial reporting, 11.147–11.153 fraud, 12.9 IASC Code of Conduct, 11.149 ICSA guidance, 11.153 IFAC guidance, 11.150 impact on reporting, 11.148 legal requirements, 11.151 Internet Service Providers (ISPs), 9.7–9.8 Interpretation: due date, 3.38 requirement, 3.3 Investment: CICs, 26.19 ratios, 19.24 surplus cash funds, 2.15 treasury, 27.6, 27.8 Investor relations, 16.1–16.57 corporate ethics, 11.37–16.57 CSR, 16.37–16.57 General Disclosure Obligation, 16.22–16.36 inside information, 16.19–16.36 shareholders, 16.1–16.18 websites, App 16 Invoice discounting, 2.26 Invoicing: debtors, 2.20–2.21 ISC see Institutional Shareholders’ Committee ISO see International Standards Organisation ISPs see Internet Service Providers IT see Information Technology Joint ventures, 11.80 Joint Working Group (JWG):going concern, 6.86 Key performance indicators (KPIs), 11.99, 11.100 Key person insurance, 14.24 KPIs see Key performance indicators Landlord and Tenant Act 1927, 22.6 Landlord and Tenant Act 1954, 22.4, 22.7 The Late Payment of Commercial Debts (Interest) Act 1998, 2.27 Law see Legal issues Laying of accounts, 3.28–3.43, 3.88 Leasehold property, 22.4–22.9 Leasing, 24.12–24.17 asset-based finance, 24.13 dealer leases, 24.16 finance leases, 24.15 hire purchase, 24.14 manufacturer leases, 24.16 operating leases, 24.15 sale and leaseback arrangements, 24.17 sources of finance, 24.12–24.17 Leave, 10.32–10.39, 13.56–13.57 Legal issues: see also Company law; Employment law; Regulations; Statutory… accounts, 3.2–3.3, 3.15–3.26, 3.30–3.31, 3.35 close companies, 26.13 contracts, 5.1–5.10 directors’ responsibilities, 8.3 e-commerce, 9.23 fire precautions, 13.28–13.29 health and safety, 13.1, 13.28–13.29, 13.65–13.73 IASs, 11.5 intangible assets, 15.14 registration of charges, 4.48 service contracts, 6.34 statutory books/registers, 4.6 Level and make-up of remuneration, 6.28–6.37 Liabilities, 3.101, 3.102, 6.94, 21.29–21.30, 21.32–21.37 Liability limitation agreements, 1.114–1.120 Lifting Operations and Lifting Equipment Regulations 1998, 13.35 Liquidity management, 27.7 Liquidity ratio, 19.23 Listed companies, 8.51, 18.37–18.39, 23.18 Listing requirements, 18.1–18.41 accountability, 18.3 admission of securities, 18.6 admission to AIM, 18.11–18.15 capital aspects, 18.25 continuing obligations, 18.21–18.41 corporate governance issues, 18.36 definition of ‘the Public’, 18.8 directors, 18.30 Disclosure Rules, App 18, 18.22, 18.24 documents issued to public investors, 18.5 financial information, 18.34–18.35 freely transferable shares, 18.7 FSA, 18.4, 18.20 full listing, 18.12, 18.15, 18.16–18.20 General Disclosure Obligation, 18.23 information release timings, 18.24 1004 Index Listing requirements (contd) interim reporting, 18.35 listed company transactions, 18.37–18.39 listed security holders, 18.27 Listing Rules, App 18, 18.22, 18.31 major interests in shares, 18.26 minimum capitalisation, 18.10 Model Code, 18.31–18.33 offers for subscription, 18.9 one controlling shareholder, 18.29 private placings, 18.9 private/public companies, 18.2 public investment, 18.1–18.10 shareholders, 18.27–18.29 treasury shares, 18.40 websites, App 18 Listing Rules: see also Model Code contents summary, App 18 directors’ remuneration, 23.53 inside information, 16.21, 16.23 listing requirements, 18.22, 18.31 Loans: bank loans, 24.7 directors, 8.21–8.36 disclosure, 8.43 Loans to directors, 8.21–8.36 changes, 8.22 company procedures, 8.35 contravention, 8.31 credit transactions, 8.25, 8.32–8.33 disclosure, 8.32, 8.33, 8.34, 8.36 exceptions, 8.28, 8.34 members’ approval, 8.23, 8.26 other company officers, 8.36 quasi-loans, 8.24 resolution requirement, 8.27 transactions, 8.29–8.30 Location: accounting records, 3.9 directors’ statement, 6.106 minute books, 4.38 registers, 4.9 London Stock Exchange, 3.32, 16.7 Long-term incentive schemes, 23.38 Loss: see also Profit and loss accounts realised loss, 3.96 Loss of office, 8.41, 23.58 Machinery see Plant, machinery and equipment Maintenance: accounting records, 3.1–3.14 Management: accounting, 19.1–19.24 audit reporting, 1.100–1.102, 1.169 buy-in finance, 24.21 buy-ins/outs, 7.12 buy-out finance, 24.21 fraud, 12.24, 12.31 Management accounting, 19.1–19.24 balance sheets, 19.20 budgets, 19.6–19.14 cashflow, 19.20 comparisons example, 19.18 definition, 19.3 financial accounts, 19.1–19.5 forecasts, 19.6–19.7, 19.21 format, 19.17 preparation, 19.4, 19.16 ratio analysis, 19.22–19.24 reporting, 19.15–19.21 websites, App 19 written commentary, 19.19 Manslaughter, 13.68 Manual Handling Operations Regulations 1992, 13.31 Manufacturer leases, 24.16 Marital status: discrimination, 10.22–10.23 Market issues: corporate ethics, 16.43 going concern, 6.96 pressures, 16.43 strategic planning, 25.3, 25.20 Materiality, 11.36–11.48 account user perspectives, 11.38, 11.45 accounting records, 11.39 applicability, 11.40 assessment, 11.42 disclosure, 8.45–8.47, 11.40 financial reporting, 11.36–11.48 immaterial items, 11.48 key factors, 11.43 nature of items, 11.44 qualitative aspects, 11.46 statements of principles, 11.37 UK accounting standards, 11.41 Maternity and parental leave, 10.32–10.39 adoptive parents, 10.37 checklist, 10.39 employment law, 10.32–10.39 family emergencies, 10.38 flexible working, 10.38 maternity leave, 10.34 maternity pay, 10.35 paternity leave, 10.36 pregnant employees’ rights, 10.33 Maximum working week, 13.45–13.46 Medium-sized companies, 3.62–3.73, 11.53 Index 1005 abbreviated accounts, 3.67–3.70 accounts exemption, 3.73 disclosure exemptions, 3.65 groups, 3.71–3.73 ineligible companies, 3.66 qualifying conditions, 3.63–3.64 Meetings, 4.27–4.40 AGMs, 4.29 board, 6.23 circulation of members’ statement, 4.33 directors’ meetings, 4.40 general meetings, 4.28, 4.30, 4.37–4.38 minutes, 4.37–4.38 notice, 4.31–4.32, 4.35 resolutions, 4.34–4.36, 4.39 Members: auditor appointments, 1.49–1.50 authorisation, 1.115 new rights for, 1.55 register, 4.7–4.13 requiring audit, 1.5, 1.16 right to demand accounts, 3.33 Memorandum of satisfaction, 4.52 Mergers, 7.15–7.19, 11.82 Mezzanine finance, 24.21 Minimum pay, 10.28 Minute books, 4.38 Minutes: general meetings, 4.37–4.38 Mobile devices: IT, 17.14 Model Code, 18.31–18.33 Money: insurance, 14.16 Money laundering, 1.69, 12.26 Money purchase schemes see Defined contribution pension schemes Motor insurance, 14.9–14.10 Multi-employer pension schemes, 21.40 Names: see also Company names auditors, 1.74 National Insurance, 20.21–20.25 calculations, 20.23 categories, 20.22 HM Revenue and Customs, 20.21–20.25 payment systems, 20.24 payroll, 20.21–20.25 records, 20.23 share-based remuneration, 23.22 state pensions, 21.3 year-end returns, 20.25 National Minimum Wage Act 1998, 10.28 Negotiations: acquisitions, 7.6 disposals, 7.24 Net realisable value, 15.17 Night work, 13.48–13.50 Noise at work, 13.30 Non-audit services: audit committees, 1.166 independence, 1.32 remuneration, 1.110–1.113 Non-compliance consequences: accounting records, 3.14 Non-executive directors, 6.18, 6.33 Non-statutory accounts, 3.82–3.83, 11.146 Notice of meetings, 4.31–4.32, 4.35 Notice of redundancy, 10.50 Notice of trust, 4.13 Notice periods: employment contracts, 10.18 Occupiers/owners of premises, 13.9 Off-setting: accounts, 11.70 Offer and acceptance: contracts, 5.2, 5.6 OFR see Operating and Financial Review One-off payments, 23.4 ‘One-stop shop’ document: FRSSE, 11.24 Operating and Financial Review (OFR), 11.89–11.93, 11.95–11.99, 27.20 ASB, 11.95–11.99 directors’ reports, 11.95–11.99, 11.101 disclosure, 11.98 DTI guidance, 11.101 going concern, 6.106 intangible assets, 15.6 key principles, 11.97 KPIs, 11.99 presentation, 11.96 Operating lease, 22.9, 24.15 Ordinary resolutions, 4.34, 4.35 Outsourcing, 3.5, 20.3 Overheads: budgets, 19.11 Overseas company accounts, 1.61, 3.19–3.22 Owners/occupiers of premises, 13.9 Ownership: business plans, 25.24 P11D/P9D forms, 20.17 Parent companies, 3.8, 11.76 Parental leave see Maternity and parental leave Part-time workers, 10.4 Patents, 15.23 Paternity leave, 10.36 PAYE (Pay As You Earn) system, 20.6–20.20 audits, 20.19 checking systems, 20.20 dispensations, 20.18 electronic filing, 20.16 employed status, 20.8 forms, 20.17 1006 Index PAYE (Pay As You Earn) system (contd) HM Revenue and Customs, 20.6–20.20 IR 35, 20.9 leavers, 20.14 new employees, 20.13 new employers, 20.10 P11D/P9D forms, 20.17 payment systems, 20.11 payroll, 20.6–20.20 personal service companies, 20.9 records, 20.12 self-employed status, 20.8 year-end returns, 20.15–20.16 Payment rights, 10.27–10.31, 10.35, 10.52 comparable employees, 10.30 employers’ defence, 10.31 employment law, 10.27–10.31, 10.35, 10.52 equal pay, 10.29 maternity pay, 10.35 minimum pay, 10.28 redundancy, 10.52 Payments: see also Remuneration commission payments, 16.43 debtor incentives, 2.23 rights, 10.27–10.31, 10.35, 10.52 Payroll, 20.1–20.25 administration, 20.1–20.5 controls, 20.5 National Insurance, 20.21–20.25 outsourcing, 20.3 PAYE system, 20.6–20.20 records, 20.4 system set-up, 20.2 websites, App 20 Penalties, 3.28, 3.34, 3.35 Pensions, 21.1–21.42 see also Retirement benefits accounting practice, 21.24–21.42 actuarial valuations, 21.28–21.33 administration, 21.15–21.23 ASB research project, 21.38, 21.42 assets, 21.30, 21.33–21.37 audit, 21.22 balance sheets, 21.34–21.35 career average salary schemes, 21.8 cash schemes, 21.10 defined benefit schemes, 21.4, 21.6, 21.27, 21.39 defined contribution schemes, 21.5, 21.14, 21.26 directors’ remuneration, 23.39, 23.49–23.51 disclosure, 21.37, 21.38 discounting liabilities, 21.32 dividends, 3.101 financial reporting, 21.21 FRRP reviews, 21.41 hybrid schemes, 21.9 incentive schemes, 23.17 insured schemes, 21.11 liabilities, 3.101, 21.29–21.30, 21.32–21.37 multi-employer schemes, 21.40 Pensions Act 2004, 21.16–21.17, 21.20, 21.37 Pensions Regulator, 21.17 performance statements, 21.36 personal pensions, 21.12 retirement benefits, 21.25, 21.38 shared risk final salary schemes, 21.7 sponsoring employers, 21.19 SSAS, 21.14 stakeholder pensions, 21.13 state pensions, 21.3 Statutory Funding Objective, 21.20 surpluses/deficits, 21.34 taxation, 21.23 trustees, 21.18 types, 21.1–21.14 valuation, 21.28–21.33 websites, App 21 Pensions Act 2004, 21.16–21.17, 21.20, 21.37 Pensions Regulator, 21.17 Performance: company boards, 16.17 evaluation, 6.12, 6.24 fraud, 12.30 incentive schemes, 23.12 KPIs, 11.99, 11.100 ratios, 19.23 related pay, 6.30 statements, 21.36 strategic planning, 25.8–25.9 Personal pensions, 21.12 Personal protective equipment (PPE), 13.36 Personal service companies, 20.9 Physical security, 17.10 Planning: see also Strategic planning disposals, 7.22 internal audit, 1.134, 1.136 IT disaster recovery, 17.18–17.21 remuneration, 23.1–23.6 sources of finance, 24.2 strategic planning, 25.1–25.27 Plant, machinery and equipment, 13.33–13.41 display screens, 13.37–13.41 insurance, 14.14 Index 1007 lifting, 13.35 PPE, 13.36 regulations, 13.34–13.35 use of equipment, 13.34 Political donations, 11.104 PPE see Personal protective equipment Pregnant employees, 10.33, 13.22 Preliminary announcements, 11.134–11.146 accounting policies, 11.143 auditor agreement, 11.138 comparative figures, 11.144 contents, 11.140 disclosures, 11.141, 11.146 distribution, 11.139 earnings per share, 11.144 financial reporting, 11.134–11.146 IASs, 11.136 management commentary, 11.142 preparation requirement, 11.135 statutory disclosure, 11.146 timings, 11.137 Prevention of fraud, App 12, 12.13–12.17 Price-earnings ratio, 19.24 Price sensitive information, 16.20, 16.23–16.26, 16.30–16.36 Pricing errors, 5.8 Principles see Accounting principles Private companies, 1.94–1.96, 3.29, 3.34, 18.2 Proceeds of Crime Act 2002, 12.26 Product catalogues, 5.7 Product liability insurance, 14.21 Products: going concern, 6.96 Professional development, 6.12, 6.21–6.25 Professional indemnity insurance, 14.22–14.23 Professional Oversight Board (POB), 1.34 Profit and loss accounts, 11.61–11.64 accounting standards, 11.63 Companies Act accounts, 11.61–11.64, 11.76, 11.86 comparative figures, 11.64 disclosure, 11.61 notes to accounts, 11.62 Profits, 3.94, 3.96 see also Profit and loss accounts Property, 22.1–22.17 charges on property, 4.49 freehold, 22.1–22.2 leasehold, 22.4–22.9 sale and leaseback transactions, 22.3 security, 22.10–22.17 VAT, 26.30 websites, App 22 Prospective benefits methods, 21.29 Prospectus Rules, App 18 Provision and Use of Work Equipment Regulations 1998, 13.34 Provisional Collection of Taxes Act 1968, 26.2 Provisions Available for Small Entities (PASE), 1.29 The public: definition of, 18.8 Public companies, 1.93–1.94, 1.97–1.98, 18.2 Public Interest Disclosure Act 1998, 13.73, 12.30 Public investment, 18.1–18.10 Public knowledge, 16.25 Public liability insurance, 14.20 Publication of accounts, 3.79–3.83 Purchases: internal control, 2.30 Qualifications: company secretary, 4.3 Qualified audit reports, 1.89, 1.92 Qualified auditor’s reports, 11.19 Qualifying considerations, 3.45–3.46, 3.59–3.60, 3.63–3.64, 3.71–3.72, 3.97 Quasi-loans, 8.24 disclosure, 8.43 Quasi-subsidiaries, 11.79 Quoted companies, 23.34, 23.42–23.54 Racial discrimination, 10.23 Ratio analysis, 19.22–19.24 Realised profits/losses, 3.96 Records: see also Accounting records accidents/injuries at work, 13.63–13.64 IT, 17.6 National Insurance, 20.23 night work, 13.50 PAYE system, 20.12 payroll, 20.4 Recruitment, 10.11, 23.4 Rectification of registers, 4.12, 4.51 Redundancy, 10.49–10.52 see also Dismissal Re-election of directors, 6.12, 6.25 References: employment, 10.19 Registered offices, 4.24 Registers, 4.5–4.21 charges, 4.20–4.21, 4.48–4.52 debenture-holders, 4.14 directors and secretaries, 4.15–4.17 directors’ interests, 4.18 interests in shares, 4.19 members, 4.7–4.13 rectification, 4.12, 4.51 requirement to keep, 4.6 Registrars, 3.20, 3.38, 3.39, 4.39, 4.50 1008 Index Regulations: see also individual regulations, Statutory …; Legal issues; Working hours; Workplace safety accidents/injuries at work, 13.61 corporate ethics, 16.45 e-commerce, 9.10–9.14 fire precautions, 13.29 hazardous substances, 13.32 manual handling, 13.31 noise at work, 13.30 auditors, 1.34 plant, machinery and equipment, 13.34–13.35 Religious discrimination, 10.23 Remuneration, 23.1–23.60 see also Directors’ remuneration bonus schemes, 23.11–23.18 company cars, 23.25–23.29 directors’ reports, 23.44–23.48 employee communication, 23.3 external auditors, 1.106–1.113, 1.163 flexible benefit schemes, 23.7–23.10 golden hellos/handshakes, 23.4 incentive schemes, 23.11–23.18 level and make-up, 6.28–6.37 low-cost benefits, 23.6 non-financial benefits, 23.5 one-off payments, 23.4 planning, 23.1–23.6 policies, 6.29, 6.38 quoted companies, 23.42–23.54 share-based remuneration, 23.19–23.24 unquoted companies, 23.55–23.60 websites, App 23 Reporting: see also Financial reporting; Financial Reporting Standards accidents/injuries at work, 13.62 annual timetable, 3.43 audit committees, 1.158, 1.169, 1.175–1.176 auditors, 1.63, 1.65–1.98, 1.71–1.105, 6.82 Combined Code, 1.103–1.104 CSR, 16.52 environmental reporting, 16.55–16.56 GRI, 16.56 management accounting, 19.15–19.21 requirements, 6.60–6.65 statutory reporting, 1.71–1.98 Reports: seel also Directors’ reports APB proposals, of change in auditor’s reports, 1.84 audit exemption, 1.14–1.15 Audit Inspection Unit, 1.36 charitable companies, 1.14–1.15 confidentiality, 1.102 criminal offence, 1.85 defective reports, 3.84–3.91 delivering under CA 2006, 3.35 directors’ remuneration, App 23, 23.44–23.48 half-yearly financial reports, 1.105 interim reports, 1.98, 1.105, 6.108, 11.112– 11.126, 18.35, 18.36 internal audit, 1.139–1.140 revised accounts/reports, 3.84–3.91 transparency reports, 1.35 website publication, 3.32 Reputation damage, 9.22 Research, 7.4, 21.42 Reservation of title, 5.15–5.18 Residual value: intangible assets, 15.16 Resignation of auditors, 1.41–1.43 Resolutions, 4.34–4.36, 4.39 Response plans: fraud, 12.35–12.38 Responsibilities see Directors’ responsibilities Rest, 13.51–13.59 breaks, 13.53 daily rest, 13.51 discrimination, 13.59 health and safety, 13.51–13.59 holidays, 13.56–13.57 shift workers, 13.55 special cases, 13.54 weekly rest, 13.52 workforce agreements, 13.58 young workers, 13.53 Retention of records, 3.10–3.13 Retirement benefits: see also Pensions directors, 23.59 flexible benefit schemes, 23.10 FRS 17, 21.24–21.25, 21.27, 21.29–21.30, 21.32, 21.34–21.37, 21.38, 21.40–21.42 Retirement Provision, 21.2 Return on capital employed, 19.23 Return on investment see Return on capital employed Return on operating assets see Return on capital employed Returns, 4.22–4.26 Revaluation: intangible assets, 15.11 Reviews: ASB review of narrative reporting, 11.102 audit, 1.40, 1.135 Index 1009 Combined Code, 6.8 directors’ reports, 11.93–11.94 going concern, App 6, 6.100 internal control, 6.77–6.78, 6.81 OFR, 11.95–11.99, 11.101 Revised accounts and reports, 3.84–3.91 circulation, 3.87 compulsory revision, 3.91 disclosure, 3.86 impact on other documents, 3.89 laying and delivering, 3.88 powers of the court, 3.91 voluntary revision, 3.85 Rewrite of tax law, 26.3 Rights: employees made redundant, 10.50 members demanding accounts, 3.33 payment rights, 10.27–10.31, 10.35 pregnant employees, 10.33 resigning auditors, 1.42 summary financial statements, 11.108 Rights and duties of external auditors, 1.58–1.69 accounting records, 1.64 annual accounts, 1.63 directors’ remuneration, 1.66 general meetings, 1.59 information, 1.60–1.61, 1.65 money laundering, 1.69 overseas subsidiaries, 1.61 reporting to regulators, 1.68 small company exemption, 1.67 third-party information, 1.62 unincorporated subsidiaries, 1.61 Risk management, 9.19–9.23 audit committees, 1.159 costs, 9.21 e-commerce, 9.19–9.23 fraud, 12.18–12.26 going concern, 6.97 health and safety, 13.13–13.24 importance, 6.70 insurance, 14.2 legal issues, 9.23 reputation damage, 9.22 treasury, 27.12–27.17, 27.30 Road Traffic Act 1988, 14.9 Rumours: disclosure, 16.33 Safety see Health and safety Safety representatives, 13.8 Sale and leaseback transactions, 22.3 Sale of Goods Act 1979, 5.4 SEC see Securities and Exchange Commission Secondary legislation, 26.4 Secretary of State, 1.38 Securities and Exchange Commission (SEC), 6.83 Security, 9.9–9.18 components, 9.17 confidentiality, 9.17 control, 9.15 e-commerce, 9.9–9.18 information, 9.18 ISO 27001, 9.18 issues, 9.16 IT, 17.8–17.17 regulations, 9.10–9.14 Security of property, 22.10–22.17 adverse weather, 22.17 alarm systems, 22.13 arson, 22.16 business premises, 22.12 company procedures, 22.15 electronic surveillance systems, 22.14 extent of arrangements, 22.11 Seed finance, 24.21 Selection process: board appointments, 6.20 Self-employed workers, 10.3, 20.8 Sending out accounts, 3.30–3.31 Sensitivity analysis: cashflow, 2.10 Serious/imminent danger, 13.17 Serious Organised Crime Agency (SOCA), 1.69 Service contracts, 6.26–6.38, 8.39 see also Contracts compensation, 6.31 directors, 4.42 executive directors, 6.32 non-executive directors, 6.33 Sexual discrimination, 10.19, 10.23, 13.22 Sexual harassment, 10.22 Share-based remuneration, 23.19–23.24 Shared risk final salary pension schemes, 21.7 Shareholders, 16.1–16.18 accountability, 6.48 AGMs, 16.6 approval of contracts, 6.36 audit committee reports, 1.176 board performance, 16.17 Combined Code, 16.4 communication, 6.52, 16.14–16.15, 18.28 constructive relationships, 16.3, 16.9 dialogue with companies, 16.14–16.15 directors’ remuneration, 23.45 equal treatment, 16.5, 18.27 governance disclosures, 16.16 growth of activism, 16.2 impact, 16.7 1010 Index Shareholders (contd) institutional shareholders, lower level, 6.50–6.59, 16.8 investor relations, 16.1–16.18 ISC, 16.11–16.12 listing requirements, 18.27–18.29 one controlling shareholder, 18.29 relations with the board, 6.44–6.49, 16.3 rights directive, 16.18 summary financial statements, 11.115 voting, 6.57–6.59, 16.10, 16.13 Shares: directors’ duties, 8.15 earnings per share, 19.24 interests register, 4.19 listing requirements, 18.7, 18.9, 18.26, 18.40 private companies, 1.95–1.96 public companies, 1.97–1.98 purchasing own shares, 1.95–1.96 treasury shares, 18.40, 23.24 Shift workers, 13.55 Sickness, 10.40–10.43 Signatures, 1.73, 3.40 Significant uncertainty, 1.82 Single member companies, 4.8 Small and Medium-sized Entities (SMEs): accounting standards, 11.25 Small companies, 3.44–3.61 abbreviated accounts, 3.55–3.57 accounts, 1.87, 3.49–3.51 accounts exemption, 3.47, 3.61 audit exemption, 1.8–1.17, 1.67, 1.111, 11.55 auditor independence, 1.29 auditor reporting, 3.58 directors’ remuneration, 23.33 directors’ responsibilities, 11.53, 11.55 ethical issues, 1.29 filing exemptions, 3.54 FRSSE, 3.52, 11.23–11.24 groups, 3.59–3.61 ineligible companies, 3.48 modified directors’ report, 3.53 qualifying conditions, 3.45–3.46 SMEs, 11.25 statement of directors’ responsibilities, 11.53 Small Firms Loan Guarantee Scheme, 24.10 Small groups, 3.44–3.61 Small schemes see Small Self-Administered Scheme (SSAS) Small Self-Administered Scheme (SSAS): pensions, 21.14 SMEs see Small and Medium-sized Entities SMP see Statutory Maternity Pay Software: IT, 17.4, 17.15 Sources of finance, 24.1–24.29 borrowing, 24.5–24.11 business angels, 24.20 capital-raising, 24.19 credit worthiness, 24.3 equity, 24.18–24.23 flotation, 24.22 government funding, 24.24–24.29 government initiatives, 24.23 grants, 24.24–24.29 leasing, 24.12–24.17 planning the search, 24.2 search checklist, 24.4 venture capital, 24.21 websites, App 24 Specialised businesses, 11.56 SSASs see Small Self-Administered Schemes SSP see Statutory Sick Pay Staffing: see also Employees; Workers business plans, 25.23 health and safety appointments, 13.19 internal audit, 1.131 IT training, 17.5 strategic planning, 25.12, 25.23 Stakeholder pensions, 21.13 Standard rate, 26.25 Standard terms of business, 5.11–5.14 Standards: see also Accounting standards; Financial Reporting Standards FSA, 23.53 ISO, 9.18 Start-up finance, 24.21 State Earnings Related Pension Scheme (SERPS), 21.3 State pensions, 21.3 see also National Insurance Statement of Principles: ISC, 16.12 Statements: auditors ceasing to hold office, 1.51–1.53 Combined Code compliance, 6.61 directors, 1.6, 1.17, 3.52, 3.57, 3.69, 6.106 directors’ responsibilities, 11.49–11.56 disciplinary procedures, 10.45 employment contract terms, 10.15 going concern, 6.102–6.106 grievance procedures, 10.45 internal control, 6.79 materiality, 11.37 non-statutory accounts, 3.83 performance, 21.36 Index 1011 SORPs, 11.26 stock/stocktaking, 3.7 summary financial statements, 11.105–11.117 Stationery, 4.46–4.47 Statutory accounts, 3.81 Statutory audit working papers, 1.57 Statutory Auditors (Transparency) Instrument 2008, 1.35 Statutory books see Registers Statutory directors’ duties, 8.2, 8.5–8.12 acting within powers, 8.6 care, skill and diligence, 8.9 company assets, 8.11 conflicts of interest, 8.10 independent judgements, 8.8 promoting company success, 8.7 third party benefits, 8.12 Statutory Funding Objective, 21.20 Statutory Maternity Pay (SMP), 10.35 Statutory reporting, 1.71–1.98 abbreviated accounts, 1.88–1.89 annual accounts, 1.71–1.82 APB proposals, of change in auditor’s reports, 1.84 criminal offence, 1.85 directors’ reports, 1.83, 1.90 distribution of accounts, 1.92–1.93 non-cash assets, 1.97–1.98 private companies, 1.94–1.96 public companies, 1.93–1.94 revised annual accounts and reports, 1.90–1.91 share purchasing, 1.95–1.96 small company accounts, 1.87 Statutory Sick Pay (SSP), 10.41 Stock, 2.34–2.37 insurance coverage, 14.15 stocktaking, 3.7 turnover, 19.23 Strategic planning, 25.1–25.27 see also Planning business assessments, 25.6, 25.8 business plans, 25.14–25.27 detailed plans, 25.5–25.13 financial issues, 25.25 internal audit, 1.134 management, 25.1–25.4, 25.23 marketing issues, 25.20 new initiatives, 25.13 performance, 25.8–25.9 quantum leap improvement, 25.9 staffing, 25.12, 25.23 strategic options, 25.10 structure of the business, 25.11, 25.22 vision statements, 25.7 websites, App 25 Stress, 13.6 Subsidiary companies, 1.10, 1.61, 23.41 Subsidiary undertakings: group accounts, 11.77–11.79, 11.87 Substantial property transactions, 8.40 Successor auditors, 1.57 Summary financial statements, 11.105–11.117 advantages/disadvantages, 11.114 background, 11.106 consulting entitled persons, 11.109–11.110 directors’ remuneration, 23.54 financial reporting, 11.105–11.117 form/content, 11.111, 11.117 other included statements, 11.112 preparation, App 11, 11.116 prohibitions, 11.107 purpose, 11.113 right to receive full accounts, 11.108 shareholders’ views, 11.115 Summary reports: internal audit, 1.139 Suppliers, 2.29, 5.14 Surpluses, 2.15, 21.34 Surveillance of health, 13.18 Taxation, 26.1–26.49 Acts of Parliament, 26.2 avoidance, 26.45–26.49 close companies, 26.13–26.19 company cars, 23.27–23.29 corporation tax, 26.6–26.12 deferred, 3.100 deferred tax, 26.32–26.44 HM Revenue and Customs guidance, 26.5 legislation, 26.1–26.5, 26.14 PAYE system, 20.6–20.20 pensions, 21.23 rewrite of tax law, 26.3 secondary legislation, 26.4 tax avoidance, 26.45–26.49 VAT, 26.20–26.31 websites, App 26 TECH 01/08, 3.96 Technology: see also E-commerce; Electronic systems; Information Technology e-mail, 9.8 Temporary workers, 10.5, 13.21 Terminology: e-commerce, 9.7 Terms of business see Standard terms of business Third parties, 5.10, 23.60 Third-party information: external auditors, 1.62 1012 Index ‘Third party only’ insurance, 14.9 Total audit exemption conditions, 1.12 Trade marks, 15.24 Trade unions, 13.8 Trading, 8.19–8.20, 9.14, 13.20, 13.40, 16.49, 17.5, 18.6 Transfer of undertakings, 10.60–10.67 checklist, 10.67 dismissal, 10.66 employees refusing transfer, 10.65 employment contracts, 10.64 transferors/transferees, 10.63 TUPE, 10.61–10.64 Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE), 10.61–10.64 Transparency auditor, 1.35 Treasury, 26.4, 27.1–27.32 Association of Corporate Treasurers, 27.11 bank relationships, 27.9 business risk, 27.14 corporate governance, 27.4, 27.32 corporate strategy, 27.3 currency risk, 27.15 directors’ reports, 27.19 disclosure, 27.18–27.31 financing risk, 27.17 FRS 13, 27.21–27.23 FRS 25, 27.24 FRS 29, 27.25–27.31 hedge transactions, 27.16 interest rate risk, 27.15 investments, 27.6, 27.8 liquidity management, 27.7 management, 27.1–27.11 narrative disclosures, 27.21–27.22 numerical disclosures, 27.21, 27.23 OFR, 27.20 performance measurement, 27.10 policy statements, 27.5 project appraisals, 27.6 shares, 18.40, 23.24 risk management, 27.12–27.17, 27.31 websites, App 27 Tribunals: employment, 10.72, 10.73 True and fair view, 11.28–11.35 Companies Act accounts, 11.29, 11.85 constitution, 11.30 financial reporting, 11.28–11.35 half-yearly financial reports, 11.35 IAS accounts, 11.34–11.35 override, 11.32–11.33 statutory reporting, 1.72 UK accounting standards, 11.31 Trust: notice of trust, 4.13 Trustees: pensions, 21.18 Trusts: ESOP, 3.104 TUPE see Transfer of Undertakings (Protection of Employment) Regulations Turnbull Report, 6.68 UITF see Urgent Issues Task Force UK see United Kingdom UK Listing Authority (UKLA), 18.4, 18.25 UK Listing Rules see Listing Rules UKLA see UK Listing Authority Undistributable reserves, 3.95 Unfair dismissal, 10.56–10.58 Unincorporated entities: directors’ responsibilities, 11.56 Unincorporated subsidiaries: external auditors, 1.61 United Kingdom (UK): accounting standards, 11.7–11.8, 11.21, 11.31, 11.41 branches of overseas companies, 3.21 IASs, 11.7–11.8 materiality, 11.41 true and fair view, 11.31 Unlimited companies, 3.43 Unmeasured working time, 13.44 Unquoted companies, 23.55–23.60 Urgent Issues Task Force (UITF), 3.18, 11.2, 11.15, 11.21, 22.9 Useful economic life, 15.13–15.15, 15.33–15.36 Utmost good faith, 14.6 Valuation, 7.9 acquisitions, 7.9 actuarial pension valuations, 21.28–21.33 brands, 15.5 intangible assets, 15.5, 15.10 Value: goodwill, 15.32 transactions, 8.48 Value Added Networks (VANs), 9.7–9.8 Value Added Tax (VAT), 26.20–26.31, 26.49 avoidance schemes, 26.49 electronically-delivered services, 26.31 EU, 26.31 inspections, 26.28 partial exemption, 26.26 penalties, 26.29 property, 26.30 rates, 26.25 records, 26.27 registration, 26.22 returns, 26.27 Index 1013 supply, 26.23–26.25 taxable persons, 26.22 Value in use, 15.17, 15.37 VANs see Value Added Networks VAT see Value Added Tax VDUs see Display screens Venture capital, 24.21 Verbal contracts, 5.3 Vibration: noise at work, 13.30 Victimisation, 10.19, 10.22 see also Discrimination Virtual Private Network (VPN), 17.14 Virus protection: IT, 17.13 Vision statements, 25.7 Visual display units (VDUs) see Display screens Voluntary insurance cover, 14.11–14.25 Voting: shareholders, 6.57–6.58, 16.10, 16.13 Wages see Remuneration Weekly rest, 13.52 Welfare: employees, 13.1–13.12 WELs see Workplace Exposure Limits Whistleblowing, 1.150, 10.20, 12.29 Work: safe systems, 13.4 Workers, 10.1–10.9 see also Employees; Staffing agency workers, 10.6 employment law, 10.1–10.9 entitlements checklist, 10.9 fixed-term workers, 10.5 homeworkers, 10.8 part-time workers, 10.4 self-employed, 10.3, 20.8 shift workers, 13.55 temporary workers, 10.5, 13.21 types, 10.1–10.9 young workers, 10.7, 13.23, 13.53 Workforce agreements, 13.58 Working capital, 2.3 Working group proposals on shareholder voting, lower level, 6.59 Working hours, 13.42–13.50 calculating working time, 13.47 health and safety, 13.42–13.50 maximum working week, 13.45–13.46 night work, 13.48–13.50 regulations, 13.42–13.43 unmeasured working time, 13.44 Working party: internal control, 6.69 Workplace Exposure Limits (WELs), 13.32 Workplace (Health, Safety and Welfare) Regulations 1992, 13.26–13.27 Workplace safety, 13.25–13.32 fire precautions, 13.28–13.29 hazardous substances, 13.32 manual handling, 13.31 noise, 13.30 regulations, 13.26–13.27, 13.28–13.32 Workshops: strategic management, 25.4 Written contracts, 5.3 Written resolutions, 4.36 Wrongful dismissal, 10.55 Wrongful trading, 8.19 Year-end returns: National Insurance, 20.25 PAYE, 20.15–20.16 Young workers, 10.7, 13.23, 13.53 Zero rate, 26.25 ... Oxford OX2 8DP, UK 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA First published as Tolley’s Finance Director’s Handbook 20 01 Second edition 20 02 Third edition 20 03 Fourth edition 20 07... sections 24 7 and 24 9 of CA 1985 or sections 3 82 and 383 of CA 20 06 (as appropriate) apply (see 1. 12 below) 1.11 Conditions for Audit Exemption For accounting periods beginning before April 20 08,... Companies Audit and Group Accounts Provisions) Order 20 08 (SI 20 08 No 527 ) and n the Charities (Accounts and Reports) Regulations 20 08 (SI 20 08 No 629 ) Also, if the accounts of a charitable company